• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Biocides Market Outlook - 2027

    Lab & Testing Equipment Directory

    Aerospace Coatings

    Resins Update

    Coatings World Q&A: Eileen Weber of allnex
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Raw Materials & Equipment
    Video Bites
    Suppliers News
    Live From Shows
    Top News
    PPG Launches HOMAX TEX>>PRO Texture System by PPG

    New Digital Solution from Interpon Helps Customers Bring Colors to Life

    What Are You Reading?

    Birla Carbon to Increase North American Prices

    Jason Woods Joins The ChemQuest Group as Director
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    PPG Launches HOMAX TEX>>PRO Texture System by PPG

    New Digital Solution from Interpon Helps Customers Bring Colors to Life

    Benjamin Moore Receives Two J.D. Power Awards

    Jamestown Coating Technologies Acquires Yenkin-Majestic Industrial Paint Business

    New Appointment for AkzoNobel Industrial Coatings
    Additives
    Binders
    Pigments
    Solvents

    Birla Carbon to Increase North American Prices

    OQ Chemicals Announces Price Increases for Oxo Intermediates in the Americas

    Birla Carbon Achieves Platinum Rating by EcoVadis

    BASF Offers Color-stable Polyamide for Electromobility

    Stahl Releases Annual ESG Report to Drive Focus on Value-chain Sustainability and Transparency
    Company Capabilities
    Buyers Guide
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Siltech Corporation

    Pilot Chemical Company

    Active Minerals

    Shepherd Color Company, The

    Clariant Additives
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    Windy City Coatings Course

    Utech Las Americas 2022

    CPCA Annual Conference

    PAINTINDIA 2022 Exhibition

    Southern Society for Coatings Technology Annual Meeting and Technical Conference
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    Siltech Corporation

    Pilot Chemical Company

    Active Minerals

    Shepherd Color Company, The

    Clariant Additives
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • India/Asia Pacific Report
      • China Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Expert's Opinion

    PPG Industries (PPG) - Analyst Comments on Disappointing 3Q17 Margins/In-Line Results

    ...

    PPG Industries (PPG) - Analyst Comments on Disappointing 3Q17 Margins/In-Line Results
    Related CONTENT
    • Student of the Year and Coatings Care finalists announced by the British Coatings Federation
    • PPG to Present Commercial Collision Trends at 2021 HD Repair Forum
    • PPG’s Anne Foulkes, Rebecca Liebert Recognized as ‘Women of Influence’ by PBT
    • PPG Highlighting Powder Coatings Innovations at FABTECH 2021
    • PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East
    Kevin McCarthy, Chemicals Anyalyst, Vertical Research Partners10.19.17
    PPG Industries (PPG: Buy, $120 PT)
    Volume Decent, Margins Disappoint

    • 3Q EPS in line; plenty of work remains on margins though. PPG posted adjusted 3Q17 EPS of $1.52A in line with our estimate, consensus of $1.52, and the midpoint of the range of $1.48-1.55 that PPG put forth on 25 September. Sales of $3.78bn reflect modest pricing, a 2% FX tailwind, and volume gains of just under 1% after the Hurricane impacts. Regarding that late September preannounce, we were encouraged to read that excluding natural disasters, volumes would have accelerated on the quarter to 1.5%+ after the weak 2Q17 volume print of zero. However, we were also guarded as it relates to the margin potential given the elevated raw material headwinds and hurricane related costs during the quarter. Still, EBIT margin of 14.4% is disappointing and well below the 15.4% that we had penciled in. On a segment basis, Performance Coatings outperformed on sales, while margin degradation in Industrials drove incremental weakness vs. our numbers. Looking forward, PPG anticipates an additional $0.05 headwind to 4Q17 related to the natural disasters.

    • Capital deployment kicks off; balance sheet still way under-leveraged. PPG repurchased $400mn worth of stock in 3Q against the company’s two-year commitment to deploy $3.5bn of excess capital by the end of 2018. Despite this capital deployment, net debt declined by $623mn q-q to 0.9x 2017 EBITDA. We note that former M&A target Akzo will host an Extraordinary General Meeting of shareholders on 30 November, just a few days before PPG regains the flexibility to re-engage, although it is not clear to us that PPG is still interested.

    • Performance Coatings beat. Sales of $2.3bn came in ahead of our estimate of $2.1bn and the Street at $2.2bn. A volume decline of 1% y-y following the hurricane was offset by acquisitions, pricing and FX gains. Sales grew 3%, much improved from the -2% level reported in 2Q17. Segment EBIT of $365mn was a net EPS tailwind of $0.03 against the $353mn that we had forecast. Noticeable in company remarks however, was the mid-single digit volume weakness in EMEA coatings as business was turned away due to either lower profitability or lack of consumer acceptance of higher prices. Volumes at the protective and marine business have been a substantial headwind in prior quarters, but trended flat y-y in 3Q, likely helped by easier comps. The US DIY paint market remains sluggish, which is consistent with the downbeat commentary we continue to hear regarding coatings performance at the big box retailers. Finally, organic sales improved modestly in auto refinish, in line with prior expectations and perhaps better than those realized at Axalta, given…

    • Industrial Coatings earnings missed. EBIT of $223mn came in well below our estimate of $240mn. Sales did trend ahead of our forecast, so weaker segment margins drove a negative EPS variance of $0.05. While y-y margin degradation of 230bps is actually an improvement from the -270bs reported in 2Q17, the pace is slower than we had hoped. We believe another quarter of negative y-y pricing is primarily responsible for the slower margin recovery, though the company noted price traction improved sequentially. Encouragingly, volumes in the segment grew more than 3% and FX represented an additional 1% tailwind. General industrial volumes continue to flourish, up mid-single digits, as it appears the positive economic momentum is following through to PPG sales. Packaging...  

    • We rate PPG shares Buy with a price target of $120. Our target suggests total upside potential of 8%, including a dividend yield of 1.6%. PPG now trades at a 2018 P/E multiple of 17.5x, which represents a discount of 3.1x or 15% vs. the average of three US coatings peers (SHW, AXTA and RPM). Importantly, we estimate that this discount would double pro forma for deployment of PPG’s excess capital vs. coatings peers. Our valuation of PPG is based on an average of two methodologies: DCF analysis and a relative P/E framework. Our DCF analysis suggests a warranted stock price of $121. Using our relative P/E framework wherein we apply a 10% premium to the S&P500 multiple, we calculate warranted value of $119 per PPG share. 

    Please see full report for details.
    Related Searches
    • refinish
    • coatings
    • paint
    • ppg industries
    Suggested For You
     Student of the Year and Coatings Care finalists announced by the British Coatings Federation Student of the Year and Coatings Care finalists announced by the British Coatings Federation
    PPG to Present Commercial Collision Trends at 2021 HD Repair Forum PPG to Present Commercial Collision Trends at 2021 HD Repair Forum
    PPG’s Anne Foulkes, Rebecca Liebert Recognized as ‘Women of Influence’ by PBT PPG’s Anne Foulkes, Rebecca Liebert Recognized as ‘Women of Influence’ by PBT
    PPG Highlighting Powder Coatings Innovations at FABTECH 2021 PPG Highlighting Powder Coatings Innovations at FABTECH 2021
    PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East
    GLIDDEN Paint by PPG Names Guacamole Its 2022 Color of the Year GLIDDEN Paint by PPG Names Guacamole Its 2022 Color of the Year
    PPG Introduces New SIGMA SAILADVANCE NX Marine Coating PPG Introduces New SIGMA SAILADVANCE NX Marine Coating
    PPG Provides Sales Update and Reports Worsening Supply Disruptions and Customer Parts Shortages PPG Provides Sales Update and Reports Worsening Supply Disruptions and Customer Parts Shortages
    PPG Launches Virtual PPG Aerospace Academy Education Program PPG Launches Virtual PPG Aerospace Academy Education Program
    PPG To Launch PPG LINQ End-to-End Digital Solution for Global Refinish Industry PPG To Launch PPG LINQ End-to-End Digital Solution for Global Refinish Industry
    Soothe Yourself with Olive Sprig: PPG Announces 2022 Color of the Year Soothe Yourself with Olive Sprig: PPG Announces 2022 Color of the Year
    Autonomic Materials Adds  William Sante to Management Team Autonomic Materials Adds William Sante to Management Team
    PPG, Universal Display Expand OLED Operations in Ireland PPG, Universal Display Expand OLED Operations in Ireland
    PPG Foundation Supports STEM Education with $170,000 in Scholarships PPG Foundation Supports STEM Education with $170,000 in Scholarships
    PPG Completes COLORFUL COMMUNITIES Project at TEDA Nursery School in Tianjin PPG Completes COLORFUL COMMUNITIES Project at TEDA Nursery School in Tianjin

    Related Content

    • Breaking News | Paint & Coatings Manufacturer News
       Student of the Year and Coatings Care finalists announced by the British Coatings Federation

      Student of the Year and Coatings Care finalists announced by the British Coatings Federation

      BCF has announced its finalists for the Student of the Year and Coatings Care awards.
      09.15.21

    • Automotive Refinish | Breaking News
      PPG to Present Commercial Collision Trends at 2021 HD Repair Forum

      PPG to Present Commercial Collision Trends at 2021 HD Repair Forum

      Speakers to share insights from PPG ADJUSTRITE commercial estimating system.
      09.14.21

    • Breaking News | People in the News
      PPG’s Anne Foulkes, Rebecca Liebert Recognized as ‘Women of Influence’ by PBT

      PPG’s Anne Foulkes, Rebecca Liebert Recognized as ‘Women of Influence’ by PBT

      Foulkes is SVP and general counsel, and Liebert is EVP.
      09.14.21


    • Breaking News | Powder Coatings
      PPG Highlighting Powder Coatings Innovations at FABTECH 2021

      PPG Highlighting Powder Coatings Innovations at FABTECH 2021

      PPG expert to discuss extreme edge coverage, corrosion protection.
      09.13.21

    • Breaking News | People in the News
      PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East

      PPG Appoints Meri Vainikka as VP, Architectural Coatings, EMEA, North and East

      Vainikka will have full accountability for the AC EMEA north and east region, which includes the Tikkurila legacy business.
      09.10.21

      Trending
      • Jason Woods Joins The ChemQuest Group as Director
      • Acotec Launches One-coat PFP with Humidur Char
      • Next Generation Evonik: Next Phase of Strategic Transformation
      • Vlad Appointed Managing Director of AkzoNobel Industrial Coatings
      • New Digital Solution from Interpon Helps Customers
      Breaking News
      • PPG Launches HOMAX TEX>>PRO Texture System by PPG
      • New Digital Solution from Interpon Helps Customers Bring Colors to Life
      • What Are You Reading?
      • Birla Carbon to Increase North American Prices
      • The 13th International R-M Best Painter Contest Final Set for June 2022
      View Breaking News >
      CURRENT ISSUE

      May 2022

      • Biocides Market Outlook - 2027
      • Lab & Testing Equipment Directory
      • Aerospace Coatings Market

      Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
      You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

      • About Us
      • Privacy Policy
      • Terms And Conditions
      • Contact Us

      follow us

      Subscribe
      Nutraceuticals World

      Latest Breaking News From Nutraceuticals World

      Sabinsa Honors 70th Anniversary of Diplomacy Between India and Japan
      Solvay Invests in Suanfarma’s Vanillin Production
      GNC Adds Products from The Honest Company, Hers, and Womaness
      Coatings World

      Latest Breaking News From Coatings World

      PPG Launches HOMAX TEX>>PRO Texture System by PPG
      New Digital Solution from Interpon Helps Customers Bring Colors to Life
      What Are You Reading?
      Medical Product Outsourcing

      Latest Breaking News From Medical Product Outsourcing

      Texas Medical Center Partners with Enterprise Ireland
      MMT Acquires Medical Production Technology Europe
      Avanos Recalls Cortrak*2 Over Potential Enteral Tube Misplacement
      Contract Pharma

      Latest Breaking News From Contract Pharma

      Catalent Introduces UpTempo Virtuoso Platform
      Elicio Therapeutics Enters Clinical Supply Agreement with Regeneron
      Reaction Biology Expands Executive Leadership Team
      Beauty Packaging

      Latest Breaking News From Beauty Packaging

      A Look at Machine Gun Kelly's $30K Diamond Mani
      Doja Cat Rocks Glam Makeup & Nails at the Billboard Music Awards
      Maggie Q Launches Beauty Supplement
      Happi

      Latest Breaking News From Happi

      Dr. Squatch Launches Black Hole Bar Soap in Light of Recently-Revealed Black Hole in Milky Way
      Nautica Introduces Nautica Oceans Pacific Coast Collection
      Thread Beauty Launches Vegan Lip Gloss Collection
      Ink World

      Latest Breaking News From Ink World

      FTA and FFTA Announce 2022-2023 Board Updates
      WestRock Publishes 2021 Sustainability Report
      INX to Highlight Color Perfection Program, INX University at GulfCan
      Label & Narrow Web

      Latest Breaking News From Label & Narrow Web

      Schreiner ProTech introduces new PCS solution for electric vehicle charging
      FTA and FFTA announce 2022-2023 board updates
      Bar Graphic and J&J Converting open US demo center
      Nonwovens Industry

      Latest Breaking News From Nonwovens Industry

      Essity Wins Innovation Award at Interclean
      Weekly Recap: Ontex Confirms Possibility of Attindas Deal, Purell Launches New Wipes & More
      TSG Finishing Starts Modernization Project
      Orthopedic Design & Technology

      Latest Breaking News From Orthopedic Design & Technology

      Denise Pedulla Appointed as Chief Legal Officer at Conformis
      ODT's Most-Read Stories This Week—May 14
      Steven Haddad Joins Extremity Medical as Chief Clinical Officer
      Printed Electronics Now

      Latest Breaking News From Printed Electronics Now

      Tageos Highlights New RFID Products at RFID Journal Live! 2022
      LG Display’s Research Results Reaffirm OLED is Optimal Gaming Display
      Google Cloud, Saule Technologies and Columbus Energy Begin Strategic Cooperation

      Copyright © 2022 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

      AD BLOCKER DETECTED

      Our website is made possible by displaying online advertisements to our visitors.
      Please consider supporting us by disabling your ad blocker.


      FREE SUBSCRIPTION Already a subscriber? Login